SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-
12
CAVION TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
-------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CAVION TECHNOLOGIES, INC.
6446 S. KENTON ST.
ENGLEWOOD, COLORADO 80111
(720) 875-1900
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 6, 2000
TO THE SHAREHOLDERS OF CAVION TECHNOLOGIES, INC.:
On behalf of our board of directors, I cordially invite you
to attend a special meeting of shareholders of our company,
Cavion Technologies, Inc., a Colorado corporation, to be held in
the Snowmass Room at the Hilton Denver Tech South, 7801 East
Orchard Road, Englewood, Colorado, on Friday, October 6, 2000 at
9:00 a.m. Mountain Time for the purpose of considering and acting
upon the following proposal:
1. The approval and ratification of the terms of the
February 2000 private placement of our common stock;
2. The approval and ratification of the terms of the July
2000 private placement of our common stock;
3. The approval and ratification of the terms of the August
2000 private placement of convertible promissory notes; and
4. The transaction of such other business as may properly
come before the meeting or any adjournment thereof.
A Proxy Statement explaining the matters to be acted upon at
the meeting is enclosed. Please read it carefully.
Only holders of record of our $.0001 par value common stock
at the close of business on Tuesday, September 5, 2000, will be
entitled to notice of and to vote at the meeting or at any
adjournments thereof. The Proxies are being solicited by our
board of directors.
Even if you expect to attend the meeting in person, we are
asking you to sign and date the enclosed Proxy and return it
promptly to us in the enclosed envelope (which requires no
additional postage if mailed in the United States). Mailing in
your Proxy to us will not affect your right to vote in person if
you attend the meeting or to amend your Proxy prior to the
meeting.
Englewood, Colorado DAVID J. SELINA
September 8, 2000 CHAIRMAN OF THE BOARD AND PRESIDENT
CAVION TECHNOLOGIES, INC.
6446 S. KENTON ST.
ENGLEWOOD, COLORADO 80111
(720) 875-1900
-----------------------------
PROXY STATEMENT
------------------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 6, 2000
GENERAL INFORMATION
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
CAVION TECHNOLOGIES, INC. FOR USE AT OUR SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD IN THE SNOWMASS ROOM AT THE HILTON DENVER
TECH SOUTH, 7801 EAST ORCHARD ROAD, ENGLEWOOD, COLORADO, ON
FRIDAY, OCTOBER 6, 2000, AT 9:00 A.M., MOUNTAIN TIME. IT IS
ANTICIPATED THAT THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY
WILL BE MAILED TO OUR SHAREHOLDERS ON OR ABOUT SEPTEMBER 8, 2000.
Any person signing and returning the enclosed Proxy may
revoke it at any time before it is voted by giving us a later
dated written revocation of Proxy, providing us with a later
dated amended Proxy, or voting in person at the meeting. The
expense of soliciting Proxies, including the cost of preparing,
assembling and mailing this Proxy material to our shareholders,
will be paid by us. It is anticipated that solicitations of
Proxies for the meeting will be made only by use of the mails;
however, we may use the services of our directors, officers and
employees to solicit Proxies personally or by telephone, without
additional salary or compensation to them. Brokerage houses,
custodians, nominees and fiduciaries will be requested to forward
the Proxy soliciting materials to the beneficial owners of our
shares in their records. We will reimburse them for the
reasonable out-of-pocket expenses incurred by them for doing so.
All shares represented by valid Proxies will be voted at the
meeting as you instruct.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of
our $.0001 par value common stock, and only shareholders of
record at the close of business on Tuesday, September 5, 2000,
are entitled to notice of and to vote at the meeting or any
adjournment thereof. On that date we had 4,966,974 shares of
common stock outstanding, each share of which is entitled to one
vote on all matters to be voted upon at the meeting.
A majority of the outstanding shares of our common stock
represented in person or by Proxy and entitled to vote will
constitute a quorum for the meeting.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The table below describes the beneficial ownership of our
common stock, as of the date of this Proxy Statement for:
o each person known by us to beneficially own more than 5% of
our common stock;
o each of our directors;
o each of our executive officers; and
o our current directors and executive officers as a group.
Unless otherwise indicated, the address of each beneficial owner
below is 6446 South Kenton Street, Englewood, Colorado 80111.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNERSHIP
------------------------ ------------------ ----------
<S> <C> <C>
Andrew Telsey 923,102 18.6%
12835 E. Arapahoe Road
Englewood, CO 80012
Venture Funding, Ltd. 895,602 18.0%
12835 E. Arapahoe Road
Englewood, CO 80012
Boutine Capital, LLC 738,370 14.9%
5460 S. Quebec St. #220
Englewood, CO 80111
David J. Selina 347,965 6.8%
Craig E. Lassen 307,575 6.2%
245 Poplar Street
Denver, CO 80220
Jeffrey W. Marshall 282,231 5.6%
Marshall E. Aster 50,000 1.0%
Daniel W. Dudley 48,667 <1%
Marvin C. Umholtz 20,001 <1%
Stephen B. Friedman 27,500 <1%
John R. Evans 42,880 <1%
David E. Maus 13,750 <1%
All directors and
executive officers
as a group (8 persons) 832,724 15.6%
------------------------
</TABLE>
In the preceding table:
o Andrew I. Telsey is a former director of Cavion and he
is the sole shareholder of Venture Funding, Ltd.
o The sole member of Boutine Capital, LLC is Julie Graham
who is the spouse of Gary Graham, the president of First
Capital Investments, Inc., the agent for three of our
private placements, including the August 2000 private
placement described below. Julie Graham is also the
sole shareholder of First Capital Investments, Inc.
o The shares owned by the executive officers and directors
include or consist of the following shares acquirable
upon exercise of stock options which are exercisable
within 60 days of this Proxy Statement: Mr. Selina
133,334, Mr. Marshall 66,667, Mr. Aster 50,000, Mr.
Dudley 36,667, Mr. Umholtz 20,001, Mr. Friedman 27,500,
Mr. Evans 27,500 and Mr. Maus 13,750.
Unless otherwise noted, we believe all persons named in the
table have sole voting and investment power with respect to all
shares beneficially owned by them.
APPROVAL AND RATIFICATION OF THE
FEBRUARY 2000 PRIVATE PLACEMENT OF
OUR COMMON STOCK FOR $12 PER SHARE
On February 17, 2000, our board of directors approved a
private placement to accredited investors of 205,000 shares of
our common stock at $12.00 per share, the closing price on the
Nasdaq SmallCap Market on February 14, 2000, the date we
negotiated the terms. The terms of the transaction were subject
to the approval of our board which approved them on February 17,
2000, when the closing price for our common stock on the Nasdaq
SmallCap Market was $16.75. We received gross proceeds of
$2,460,000. We received net proceeds of $2,211,354 after payment
of $196,800 to First Capital Investments, Inc. and other offering
costs. First Capital also received a five year warrant to
purchase 20,500 shares of our common stock exercisable at $13.20
per share. We also filed a registration statement with the U.S.
Securities and Exchange Commission to register the shares of
common stock for the private placement and the shares underlying
the warrant issued to First Capital.
We are submitting this transaction and the following two
transactions to a vote of our shareholders in an effort to comply
with the shareholder approval requirement of Nasdaq Stock Market
Rule 4460(i)(1)(D). That Rule requires shareholder approval for
the issuance in a transaction not involving a public offering of
voting securities equal to twenty percent (20%) or more of the
total voting securities of a company at less than fair market
value prior to such issuance. While we did not issue twenty
percent (20%) of our total voting securities and we do not
believe that the shares were issued at less than the fair market
value at the time of the offering, in an abundance of caution
especially considering the cumulative effect of the other private
securities transactions described below, we are asking our
shareholders to approve and ratify the terms and conditions of
this transaction. If this transaction was coupled with our two
other private placements, the total shares issued could total
more than 20% of our total shares of common stock, depending on
the time the percentages are measured and the number of shares
actually issued in the other two transactions.
All of the private placements were made on the basis of arms
length negotiations with representatives of the accredited
investors. The decision to raise the capital needed for payment
of debt and expansion by means of these private placements of our
securities rather than by a public offering at market price, was
carefully considered by our management. It was management's
conclusion that our immediate need for the additional capital,
coupled with the additional time necessary for us to conduct a
successful public offering, as well as the market risks attendant
to any public offering in 2000, especially in internet companies,
outweighed the benefit of a potentially higher stock price in a
public offering.
Our board of directors and our management believe that this
issuance of our common stock was in the best interests of Cavion
and our shareholders. The additional capital made available to
us in February 2000 was used for general corporate purposes,
including working capital.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE APPROVAL AND RATIFICATION OF THE
FEBRUARY 2000 PRIVATE PLACEMENT OF OUR COMMON STOCK.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
APPROVAL AND RATIFICATION OF THE
JULY 2000 PRIVATE PLACEMENT OF
OUR COMMON STOCK AT A VARIABLE PRICE
On July 21, 2000, our board of directors approved a private
placement of up to 1,000,000 shares of our common stock over a 24
month period to Mothlake International Limited pursuant to the
terms of a Common Stock Purchase Agreement dated July 21, 2000.
The Agreement establishes what is sometimes termed an equity line
of credit or equity drawdown facility. The board is now asking
that this private placement be approved and ratified by our
shareholders.
In general, the drawdown facility operates like this: the
investor, Mothlake, has committed to provide us with money as we
request it over a 24 month period, in return for the issuance of
up 1,000,000 shares of our common stock to Mothlake.
Approximately once every 30 trading days, we may request a draw
of up to $1,500,000. The maximum amount we actually can draw
down upon each request will be 4.5% of the weighted average price
of our common stock for the three month period prior to our
request multiplied by the total trading volume for the three
months prior to our request. Each drawdown must be for at least
$250,000 during any investment period. The investment period is
defined as 22 trading days and consists of two pricing periods of
11 trading days. The purchase of the stock is settled on the
second business day following the end of each pricing period. At
the end of a each pricing period following the drawdown request,
the drawdown amount is determined based on the volume-weighted
average stock price during that 11 day period. We then use the
formulas in the Agreement to determine the number of shares we
will issue to Mothlake in return for that money. We may not
request a new drawdown until the expiration of 5 trading days
after the last settlement date for the preceding pricing period.
There is no maximum of draws; however, the number of draws
is limited by the number of trading days which must occur between
each drawdown as described above. We are under no obligation to
request a draw for any period.
The number of shares we would issue and the proceeds we
would receive could be further limited by a provision of the
Agreement that prevents us from issuing shares to Mothlake to the
extent Mothlake would beneficially own more than 9.9% of our then
outstanding common stock. Any resales of shares by Mothlake
would reduce the number of shares beneficially owned by Mothlake,
and would enable us to issue additional shares to Mothlake
without violating this condition.
The per share dollar amount Mothlake pays for our common
stock for each drawdown includes a 10% discount to the average
daily market price of our common stock for the 22-day period
after our drawdown request, weighted by trading volume. We will
receive the amount of the drawdown less an escrow agent fee of
$1,500 and 10.64% for placement fees. The placement fees will be
paid 8% to Avalon Research Group, Inc. and 2.64% to Strategic
Growth International, Inc.
As provided in the Agreement, we issued to Mothlake warrants
to purchase up to 60,000 shares of our common stock at an
exercise price of $10.17 per share. In addition, under the
Agreement, at the time of each drawdown we will issue to Mothlake
a warrant to purchase up to a number of shares of our common
stock equal to 25% of the shares purchased in that drawdown,
exercisable at the same price as the shares it purchased in that
drawdown. We have agreed to file a registration statement with
the SEC to register the shares for the drawdowns and the shares
underlying the warrants.
As explained for the prior proposal, we are submitting this
transaction to a vote of our shareholders in an effort to comply
with the shareholder approval requirement of Nasdaq Stock Market
Rule 4460(i)(1)(D). That Rule requires shareholder approval for
the issuance in a transaction not involving a public offering of
voting securities equal to twenty percent (20%) or more of the
total voting securities of a company at less than fair market
value prior to such issuance. All of the shares issued to
Mothlake in the drawdowns will be at a discount of 10% from their
fair market value. Therefore, in an effort to comply with the
Nasdaq Stock Market Rule we are also asking our shareholders to
approve and ratify the terms and conditions of this transaction.
While we do not know how many shares we will issue under the
drawdowns under the Agreement, we are registering 1,000,000
shares of our common stock which, if issued, will be more than
the 20% of our outstanding shares of common stock, or 993,394
shares. If we do not receive shareholder approval by the time we
request a drawdown from Mothlake which would require us to issue
more than 993,394 shares (including the other two private
placements), or if the registration statement registering the
common stock underlying the Agreement has not been declared
effective by the SEC by November 30, 2000, the Agreement will be
terminated and the equity drawdown will not be available to
provide capital to us.
While we recognize that the effect of the drawdowns gives
Mothlake a 10% discount from the price which would otherwise be
available to the public on the date of each drawdown, we consider
the overall effect of the availability of the funds on an as
needed basis for the drawdowns to be positive for Cavion.
Accordingly, while we cannot safely predict the effect of this or
any other transaction on the market price of our common stock, we
do not believe that this transaction should adversely affect
that price.
Our board of directors and our management believe that the
equity drawdowns with Mothlake and the issuance of the other
securities in the two other private placements are in the best
interests of the Cavion and our shareholders. The additional
capital made available to us by these transactions will permit
us, among other things, to repay outstanding promissory notes in
the principal amount of $470,000 due October 19, 2000 (to the
extent no voluntarily converted by the holder into shares of our
common stock), to expand our sales and marketing efforts, to
continue our product development efforts, including the
development and marketing of Member EmporiumT and for general
corporate purposes, including working capital and potential
acquisitions. If and to the extent that the holders of the
October Notes convert their Notes into shares of our common
stock, it will be done on the same terms and conditions as our
August 2000 private placement of Notes and Warrants and the
shares underlying their promissory notes and warrants will be
included in the registration statement for that offering.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE APPROVAL AND RATIFICATION OF THE
JULY 2000 PRIVATE PLACEMENT OF OUR COMMON STOCK.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
APPROVAL AND RATIFICATION OF THE
AUGUST 2000 PRIVATE PLACEMENT OF
PROMISSORY NOTES CONVERTIBLE TO COMMON STOCK
AT $6.00 PER SHARE (SUBJECT TO ADJUSTMENT)
On August 1, 2000, our board of directors approved a private
offering of up to $3,000,000 in convertible subordinated Notes
and Warrants to purchase shares of our common stock. The one
year secured Notes bear 10% interest per annum. The interest is
payable quarterly in cash or in freely tradable shares of our
common stock, in our discretion. If we pay the interest with
stock, the stock will be valued at the closing price on the date
of the interest payment. Payment of interest will have
preference over payment of any dividends on the common stock,
although our policy is not to pay any dividends at this time.
The Notes are convertible into our common stock at the ratio of
8,333 shares per $50,000 note ($6.00 per share) at the option of
the purchaser at any time after we file a registration statement
to register the underlying shares, which we are required to do
promptly after the conclusion of the offering. We may pre-pay
the Notes, with 30 days notice, if our common stock trades at a
closing price of $14.00 per share or greater for any 20
consecutive trading days. Each purchaser of a Note will also be
granted a five year Warrant to purchase 2,083 shares exercisable
at $6.00 per share for each $50,000 Note purchased. Our
registration statement with the SEC will cover the shares
underlying both the Notes and the Warrants, as well as the shares
which we may elect to issue as payment of interest on the Notes.
On the effective date of the registration statement, each
purchaser, at its discretion, may adjust the conversion price in
the event the average closing price for our common stock during
the preceding ten day trading period is equal to or less than
$6.00 per share. If during the one year period following the
effective date of the registration statement, we sell shares of
our stock, directly or indirectly, at a price less than the
conversion price of $6.00, or as adjusted by the purchaser, then
we will be required to reduce the conversion price of the Notes
to equal the lower price.
The Notes will be subordinated in right of payment to our
15% secured notes in the principal amount of $470,000 due October
19, 2000. The holders of the October Notes have the first
priority security interest in our assets. The Notes will be in
default if we fail to pay principal or interest at maturity, or
if we fail to observe or perform certain covenants, conditions
and agreements set forth in the Notes, or if we become bankrupt
or insolvent. No notices or other evidence are required to be
furnished as to the absence of default or as to compliance with
the terms of the Notes.
First Capital Investments, Inc., as the placement agent for
this offering, is entitled to receive 8% of the gross proceeds of
the offering. It is also entitled to receive a five year warrant
to purchase 10% of the total amount of Notes sold exercisable at
110% of price of the Notes.
As explained for the two prior proposals, we are submitting
this transaction to a vote of our shareholders in an effort to
comply with the shareholder approval requirement of Nasdaq Stock
Market Rule 4460(i)(1)(D). That Rule requires shareholder
approval for the issuance in a transaction not involving a public
offering of voting securities equal to twenty percent (20%) or
more of the total voting securities of a company at less than
fair market value prior to such issuance. The Notes will be
issued at fair market value, but there is the possibility for
adjustments to the conversion price of the Notes which would make
some, if not all, of the shares issued upon conversion of the
Notes to be at less than the original fair market value.
Therefore, in an effort to comply with the Nasdaq Stock Market
Rule we are also asking our shareholders to approve and ratify
the terms and conditions of this transaction.
While we do not know how many shares we will issue under the
drawdowns under the Mothlake Agreement, between this Notes
offering which aggregates approximately 624,960 shares and our
February 2000 private placement of 205,000 shares, these
offerings could already aggregate approximately 829,260 shares
which is close to the 20% limitation of 993,394 shares.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE APPROVAL AND RATIFICATION OF THE
AUGUST 2000 PRIVATE PLACEMENT OF
CONVERTIBLE PROMISSORY NOTES.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
OTHER BUSINESS
As of the date of this Proxy Statement, our management was
not aware of any other matter to be presented at the meeting
other than as presented. However, if any other matters are
properly brought before the meeting, the shares represented by
valid Proxies will be voted with respect to such matters in
accordance with the judgment of the persons voting them.
For the approval and ratification of each of our three
private placements in 2000, of the shares of common stock
represented in person or by proxy at the meeting and entitled to
vote, the votes cast approving and ratifying each of the private
placements must exceed the votes opposing it. Abstentions and
broker non-votes will be counted for purposes of establishing a
quorum only. Only those votes cast for the approval and
ratification of the private placements will be counted as votes
in favor or affirmative votes.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR OUR NEXT ANNUAL MEETING OF SHAREHOLDERS
Any proposal from a shareholder intended to be presented at
our next annual meeting of shareholders to be held in May 2001,
must be received at the offices of the Company, 6446 South Kenton
St., Englewood, Colorado 80111 no later than January 1, 2001, in
order to be included in the our proxy statement and proxy for
that meeting. In addition, any such proposal must satisfy the
conditions established by the SEC for shareholder proposals to be
included in the proxy statement for that meeting.
Englewood, Colorado DAVID J. SELINA
September 8, 2000 CHAIRMAN OF THE BOARD AND PRESIDENT
APPENDIX
PROXY CARD
CAVION TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David J. Selina and Marshall
E. Aster, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated
below, all the shares of common stock of Cavion Technologies,
Inc. held of record by the undersigned on September 5, 2000, at
the Special Meeting of Shareholders to be held on October 6, 2000
or any adjournment thereof.
1. The approval and ratification of the terms of the
February 2000 private placement of our common stock;
For [ ] Against [ ]
2. The approval and ratification of the terms of the July
2000 private placement of our common stock;
For [ ] Against [ ]
3. The approval and ratification of the terms of the August
2000 private placement of convertible promissory notes; and
For [ ] Against [ ]
4. The transaction of such other business as may properly
come before the meeting or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. THIS
PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO MATTERS NOT
KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice of
Special Meeting of Shareholders and Proxy Statement furnished
herewith.
Dated:--------------, 2000
-------------------------------------
-------------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the
name(s) stenciled hereon. Executors,
administrators, trustees, guardians
and attorneys should indicate when
signing. Attorneys should submit
powers of attorney.
PLEASE SIGN AND RETURN THIS PROXY IN THE ENCLOSED PRE-
ADDRESSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING OR TO SUBMIT A
LATER DATED REVOCATION OR AMENDMENT TO THIS PROXY ON THE ISSUE
SET FORTH ABOVE.
